UNITED NATIONS—Plans were set Monday for the highest-level engagement between the U.S. and Iran in more than 30 years, fueling cautious optimism about the prospect for progress in curtailing Iran's nuclear work after a decade of threats and stalled diplomacy.

The meeting on Thursday at the U.N. General Assembly in New York will bring Iranian Foreign Minister Javad Zarif together with U.S. Secretary of State John Kerry and his counterparts from the five other major powers who are negotiating with Tehran on its nuclear program.

Messrs. Obama and Rouhani both address the General Assembly on Tuesday. The White House said it was open to the arrangement of a formal meeting between the U.S. and Iranian leaders, a stronger commitment than the administration made last week, when it said there might be the opportunity for a handshake.

Iran's charm offensive, culminating at the U.N. General Assembly with a speech by President Hassan Rouhani, is a prime example of how Iran's sanctions-wracked economy is shaping foreign affairs. Brookings Institution senior fellow Dr. Suzanne Maloney discusses on the News Hub.

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U.S. and European leaders, citing past failed openings, said they were being careful about embracing Tehran's new diplomatic overtures and the Iranian regime's expressed willingness to negotiate on the nuclear dispute.

A group including the five permanent members of the U.N. Security Council plus Germany has served as the main diplomatic channel for negotiating with Iran on its nuclear program, which the West, despite Tehran's denials, says is aimed at the production of nuclear weapons.

U.S. and European officials said they would closely monitor whether Mr. Zarif engages more substantively on the nuclear questions than his predecessors. They are also hoping he will formally respond to previous offers made by the global powers, known as the P5+1, that sought commitments from Tehran to cap its nuclear program in return for Western economic incentives and a slackening of international sanctions on Tehran.

"The question remains open" on whether Iran is serious, said a senior U.S. official involved in the diplomacy. "The ball has been in their court for some time."

A second U.S. official said the P5+1 was "waiting to see what [the Iranians] come with" on Thursday. The P5+1 and Iran will resume talks next month in Geneva, the European Union's foreign-policy chief, Catherine Ashton, said Monday.

Mr. Rouhani campaigned on a pledge to reduce sanctions on Iran through negotiations with the West.

He was elected in June to succeed President Mahmoud Ahmadinejad, whose General Assembly appearances were defined by provocation rather than conciliation.

In recent weeks, Messrs. Rouhani and Zarif have sought to woo the West, conducting interviews with the Western media and writing on social-media sites.

Mr. Zarif, on the first day of the U.N. General Assembly, met with the foreign ministers of the U.K., Italy, and the Netherlands, as well as with Baroness Ashton. Mr. Zarif—who is also Iran's top nuclear negotiator—sought to stress to these diplomats that Tehran is serious about resolving the nuclear crisis quickly.

Handshakes that Made History

A handshake between President Barack Obama and Iran's new president, Hasan Rouhani, at the United Nations Tuesday would mark a significant turning point in U.S.-Iran relations, as no American president has met a top Iranian leader in over three decades.

"I was struck by the energy and determination the minister expressed to me," Baroness Ashton said after her meeting with Mr. Zarif on Monday morning.

U.K. Foreign Secretary William Hague, offering a more cautious response after meeting with Mr. Zarif for a half-hour on Monday, said Tehran must match its positive statements with actions.

The last formal talks involving world powers and Iran were held in Kazakhstan in April, when Western officials said Iran failed to respond credibly to their proposal that Iran scale back its enrichment activities in exchange for the relaxation of some of the economic sanctions now in place.

The meeting on Thursday would be the first formal face-to-face session between the top U.S. and Iranian diplomats since 1979.

The last direct encounter came in 2001, when then-Secretary of State Colin Powell and his Iranian counterpart exchanged a handshake before a U.N. meeting.

A year earlier, then-Secretary of State Madeleine Albright and Iran's foreign minister attended the same U.N. meeting, but had no one-on-one contact.

An early focus of Iran is to try to regain access to the international banking system, according to U.S. and European officials.

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